FAE Tax Elective 2014

aca2801 · 30-08-2014 9:07pm

just wondering did people do much study in relation to the case law or read the oecd? thanks

littlemiss123 · 30-08-2014 10:17pm

aca2801 wrote: »

just wondering did people do much study in relation to the case law or read the oecd? thanks

It's on my to do list! Gotta to it tomorrow, 2 days before the exams I know!!

littlemiss123 · 31-08-2014 12:12pm

Just going over the case law today, the Franked Investment Income Group Litigation case, it seems the ECJ held that it was unfair (in the UK) to treat dividends received by a UK company from a UK subsidiary (exempt and a tax credit) vs from a foreign subsidiary (taxable and no tax credit) differently.

Yet, in Ireland we treat dividends from another Irish Company as exempt (FII), and dividends from foreign companies as taxed at 12.5%/25%. Am I missing something, is this not then unfair per the ECJ ruling?

aca2801 · 31-08-2014 5:33pm

I was hoping could any one tell me why the answers for Q23a in VAT bank v the Case Study 4 Brian Jones have different solutions? I thought that if you were a property developer and there after made a supply of a developed house to yourself in a private capacity you would be obliged to charge VAT on the supply since you already claimed an input on developing it. (as per the Case) but the solution for Q23a says for the self supply the revenue treatment is to clawback the VAT inputs claimed on the construction. Thanks

House of Wolves · 31-08-2014 6:27pm

littlemiss123 wrote: »

Just going over the case law today, the Franked Investment Income Group Litigation case, it seems the ECJ held that it was unfair (in the UK) to treat dividends received by a UK company from a UK subsidiary (exempt and a tax credit) vs from a foreign subsidiary (taxable and no tax credit) differently.

Yet, in Ireland we treat dividends from another Irish Company as exempt (FII), and dividends from foreign companies as taxed at 12.5%/25%. Am I missing something, is this not then unfair per the ECJ ruling?

I think due to the credit it results in same position from an Irish tax perspective. The 12.5% due to Irish revenue has already been paid out of the underlying profits of the Irish company paying the dividend while the foreign company hasn't paid this to Irish revenue yet and is hence taxed at 12.5% but receives a credit.

I think in the UK case they were not getting the credit so if for example an Irish company paid a dividend to the UK, it would be getting taxed at 12.5% in Ireland on its trading profits and then again at 25% in the Uk, total tax 37.5%, while when getting a tax credit any foreign tax suffered gives a credit on the underlying profits out of which the dividends were paid, therefore total tax would be 25%.

Does that make sense? I'm not sure.

Fhane · 31-08-2014 10:32pm

aca2801 wrote: »

I was hoping could any one tell me why the answers for Q23a in VAT bank v the Case Study 4 Brian Jones have different solutions? I thought that if you were a property developer and there after made a supply of a developed house to yourself in a private capacity you would be obliged to charge VAT on the supply since you already claimed an input on developing it. (as per the Case) but the solution for Q23a says for the self supply the revenue treatment is to clawback the VAT inputs claimed on the construction. Thanks

You're correct. If VAT is reclaimed on construction, with the intention of selling the property in the course of business, and is then used personally, the developer must charge VAT at 13.5% on the self supply. The 'effect' is that the VAT originally claimed is clawed back because the developer is now paying VAT on the self supply equal to what was claimed on construction. The brian jones case solution and Q23A are worded differently but the net effect is the same for the developer.

littlemiss123 · 31-08-2014 10:51pm

Fhane wrote: »

You're correct. If VAT is reclaimed on construction, with the intention of selling the property in the course of business, and is then used personally, the developer must charge VAT at 13.5% on the self supply. The 'effect' is that the VAT originally claimed is clawed back because the developer is now paying VAT on the self supply equal to what was claimed on construction. The brian jones case solution and Q23A are worded differently but the net effect is the same for the developer.

I still don't get VAT on property. Really worried about it. Anyone else feel the same?

aca2801 · 31-08-2014 11:40pm

Fhane wrote: »

You're correct. If VAT is reclaimed on construction, with the intention of selling the property in the course of business, and is then used personally, the developer must charge VAT at 13.5% on the self supply. The 'effect' is that the VAT originally claimed is clawed back because the developer is now paying VAT on the self supply equal to what was claimed on construction. The brian jones case solution and Q23A are worded differently but the net effect is the same for the developer.

yeah i know its the same net effect, but i was just wanted to be sure one way isnt preferred over the other. as you said its still the same thing.

Fhane · 03-09-2014 5:28pm

What are peoples thoughts on topics tomorrow? I have a funny feeling about a revenue audit. Also double taxation and company residency.

2014fae · 03-09-2014 7:18pm

Silly question but are we supposed to link indicators in this like the core? Don't see tomorrow going well for me! Not enough time spent on elective!

bikeman1 · 03-09-2014 8:01pm

I think for tax elective you have to look at all the issues that need to be addressed and link the solution across to all taxes for the particular issue.

If there are two completely separate parts to a sim, and there is no possibility within those to link, then you don't have to link.

The key is making sure you have the interaction of taxes ie. CGT Stamp Duty VAT all linking together in the solution for that part of the sim.

Revenue Audits would be nice.

VAT on property.

Residency rules / what applies to the client.

Probably something to do with Incorporation / Branch / Sub / Reliefs

A small part on VAT.

applehunter · 03-09-2014 9:53pm

That Kelso case from 2011 must have been a nightmare to do.

I think onshore pooling will appear so hope its something more straighforward than that.

maninblack · 04-09-2014 7:07pm

bikeman1 wrote: »

I think for tax elective you have to look at all the issues that need to be addressed and link the solution across to all taxes for the particular issue.

If there are two completely separate parts to a sim, and there is no possibility within those to link, then you don't have to link.

The key is making sure you have the interaction of taxes ie. CGT Stamp Duty VAT all linking together in the solution for that part of the sim.

Revenue Audits would be nice.

VAT on property.

Residency rules / what applies to the client.

Probably something to do with Incorporation / Branch / Sub / Reliefs

A small part on VAT.

Wow, nice predication. Suppose they are limited in what they can ask.

Was happy enough with that today. I made a big of a bags of 1 or 2 things on SIM 2 but fairly sure I got most other things correct. Should be enough but you never know I guess :pac:

qwabercd · 04-09-2014 7:41pm

What did ye say for Sim 1 in relation to the sale of the trade? I said to hive it down and then use s.626B, not sure if that was on the right wavelenght. Apart from that section I thought the rest of the paper was quite handy.

maninblack · 04-09-2014 7:43pm

qwabercd wrote: »

What did ye say for Sim 1 in relation to the sale of the trade? I said to hive it down and then use s.626B, not sure if that was on the right wavelenght. Apart from that section I thought the rest of the paper was quite handy.

what i said was:

1) share buyback to get rid of the dissident shareholder
2) said yeah hive down and split out the companies using re-org
3) sell off the agri trade (now a new co) with 626B

wasn't OVERLY confident with that one tbh but there's enough in there for RC's

lydia123 · 04-09-2014 7:44pm

qwabercd wrote: »

What did ye say for Sim 1 in relation to the sale of the trade? I said to hive it down and then use s.626B, not sure if that was on the right wavelenght. Apart from that section I thought the rest of the paper was quite handy.

I said the same..
Yeah I thought it was ok, hopefully wrote enough and got calcs "reasonably correct"!

qwabercd · 04-09-2014 7:48pm

maninblack wrote: »

what i said was:

1) share buyback to get rid of the dissident shareholder
2) said yeah hive down and split out the companies using re-org
3) sell off the agri trade (now a new co) with 626B

wasn't OVERLY confident with that one tbh but there's enough in there for RC's

Yep went the exact same route. They fairly spelled out the share buyback, a lot of the answers were quite obvious. The hive down and s.626B was a bit messy, wasn't sure if they had to wait 12 months for the shareholding requirement or if Schedule 25A would kick in as it was held by another group company. And then the CGT and SD originally avoided on the hive down would be clawed back anyway.

All over now anyway and onwards we'll move to the pub.

maninblack · 04-09-2014 7:52pm

qwabercd wrote: »

Yep went the exact same route. They fairly spelled out the share buyback, a lot of the answers were quite obvious. The hive down and s.626B was a bit messy, wasn't sure if they had to wait 12 months for the shareholding requirement or if Schedule 25A would kick in as it was held by another group company. And then the CGT and SD originally avoided on the hive down would be clawed back anyway.

All over now anyway and onwards we'll move to the pub.

Yeah i noted that alright that the taxes avoided on the hive down would just be clawed back when we dump the agri business. thought that was a bit messy but couldn't think of any way round it

what was the story with sim 2? i said the niece or whoever she was was outside the scope of Irish CAT as she's not irish resident and the property is outside state. Said that Ann would be subject to CGT of circa 20k if i remember correctly, but retirement relief would clear it out. Others told me after that CAT would kick in and RR wasn't available. not too sure why though

qwabercd · 04-09-2014 8:09pm

maninblack wrote: »

Yeah i noted that alright that the taxes avoided on the hive down would just be clawed back when we dump the agri business. thought that was a bit messy but couldn't think of any way round it

what was the story with sim 2? i said the niece or whoever she was was outside the scope of Irish CAT as she's not irish resident and the property is outside state. Said that Ann would be subject to CGT of circa 20k if i remember correctly, but retirement relief would clear it out. Others told me after that CAT would kick in and RR wasn't available. not too sure why though

Yer wan is subject to CAT I think because it's if either the donor or donee is R or OR. Ann is resident, therefore CAT applies. You could offset the CGT Ann pays against the CAT but it doesn't fully cover it. No RR for Ann because it wasn't qualifying business property (RR isn't available for assets like houses etc, only business type assets).

aca2801 · 04-09-2014 8:16pm

i didnt find it de worst, but my time was so bad!!!

maninblack · 04-09-2014 8:17pm

qwabercd wrote: »

Yer wan is subject to CAT I think because it's if either the donor or donee is R or OR. Ann is resident, therefore CAT applies. You could offset the CGT Ann pays against the CAT but it doesn't fully cover it. No RR for Ann because it wasn't qualifying business property (RR isn't available for assets like houses etc, only business type assets).

ah feck it yeah what was i thinking of course RR doesn't apply. oh well, NC there :roll eyes:

ah hopefully enough with the other stuff, confident i nailed at least 4/5 anyway so shud be enough

TooLate · 04-09-2014 8:22pm

Am i right in sayin 3 Indicators in each case?

This is what i went for, proab missed a few things anyone else got any ideas:

Sim 1:

1.Company buy back of shares: Relief available and also retirement relief so no tax paid by James:

2.Seperate the trades: Went with setting up a holding company and then seperate the trade in to another company, Relief was available (Not sure about this

3.Then spoke on the share disposal advantages and disadvantages as well as participation exemption if held new company for a year

Sim 2:

1. Retirement relief available for share disposal to son and nephew..nephew took sons threshold too, business relief available to both but not the investment asset, Stamp Duty 1%, spoke about connected persons and market value.

2. CGT on property to neice worldwide gain, to tax to niece as resident in Spain, Spanish tax???

3. Grandhildren gift of 3,000 p/a spoke about the group B threshold??

Sim 3:

1.Revenue spoke abou prompt disclosure and unprompted disclosure, mitigation of penalties.

2. Vat issue 1. Charge Vat but it cancels out as input and output in same return
Vat issue 2. Spoke above reverse charge basis and giving Irish Vat number to german trader
Vat issue 3. Charge tax on lease and reclaim vat on the purchase and then charge vat on rent of 23%

3.Wasnt sure about the boliva brazil france indicator spoke about unilaterial relief for boliva and brazil
PE in brazil, dividends credit available

Anyone else do something similar for these cases or am I way off the mark!!

Thank God its over (until next year anyway) Now to the pub

maninblack · 04-09-2014 8:26pm

TooLate wrote: »

Am i right in sayin 3 Indicators in each case?

This is what i went for, proab missed a few things anyone else got any ideas:

Sim 1:

1.Company buy back of shares: Relief available and also retirement relief so no tax paid by James:

2.Seperate the trades: Went with setting up a holding company and then seperate the trade in to another company, Relief was available (Not sure about this

3.Then spoke on the share disposal advantages and disadvantages as well as participation exemption if held new company for a year

Sim 2:

1. Retirement relief available for share disposal to son and nephew..nephew took sons threshold too, business relief available to both but not the investment asset, Stamp Duty 1%, spoke about connected persons and market value.

2. CGT on property to neice worldwide gain, to tax to niece as resident in Spain, Spanish tax???

3. Grandhildren gift of 3,000 p/a spoke about the group B threshold??

Sim 3:

1.Revenue spoke abou prompt disclosure and unprompted disclosure, mitigation of penalties.

2. Vat issue 1. Charge Vat but it cancels out as input and output in same return
Vat issue 2. Spoke above reverse charge basis and giving Irish Vat number to german trader
Vat issue 3. Charge tax on lease and reclaim vat on the purchase and then charge vat on rent of 23%

3.Wasnt sure about the boliva brazil france indicator spoke about unilaterial relief for boliva and brazil
PE in brazil, dividends credit available

Anyone else do something similar for these cases or am I way off the mark!!

Thank God its over (until next year anyway) Now to the pub

perm establishment is part of the UK tax treaty. the foreign branch profits were being taxed here as the parent was irish registered and being taxed on its worldwide gains. least thats what i said/thought

for the gifts to the grandchild i literally just said yeah, 30k CAT threshold or whatever it is. keep it below that and you're good. said even though they didn't want a trust, it'd be the ideal way to care for a minor over the long term and should be reconsidered

arnie_ni · 04-09-2014 10:45pm

Anyone form the north here, curious as to what yous thought of our tax?

Dreaming of sunshine · 05-09-2014 10:45am

TooLate wrote: »

Am i right in sayin 3 Indicators in each case?

This is what i went for, proab missed a few things anyone else got any ideas:

Sim 1:

1.Company buy back of shares: Relief available and also retirement relief so no tax paid by James:

2.Seperate the trades: Went with setting up a holding company and then seperate the trade in to another company, Relief was available (Not sure about this

3.Then spoke on the share disposal advantages and disadvantages as well as participation exemption if held new company for a year

Sim 2:

1. Retirement relief available for share disposal to son and nephew..nephew took sons threshold too, business relief available to both but not the investment asset, Stamp Duty 1%, spoke about connected persons and market value.

2. CGT on property to neice worldwide gain, to tax to niece as resident in Spain, Spanish tax???

3. Grandhildren gift of 3,000 p/a spoke about the group B threshold??

Sim 3:

1.Revenue spoke abou prompt disclosure and unprompted disclosure, mitigation of penalties.

2. Vat issue 1. Charge Vat but it cancels out as input and output in same return
Vat issue 2. Spoke above reverse charge basis and giving Irish Vat number to german trader
Vat issue 3. Charge tax on lease and reclaim vat on the purchase and then charge vat on rent of 23%

3.Wasnt sure about the boliva brazil france indicator spoke about unilaterial relief for boliva and brazil
PE in brazil, dividends credit available

Anyone else do something similar for these cases or am I way off the mark!!

Thank God its over (until next year anyway) Now to the pub

Would RR apply in Sim 1? I didn't think so because he wasn't disposing of shares in a family trading company - he wasn't connected to the Sweeney brothers? Said pretty much everything else you said though.

TooLate · 05-09-2014 11:16am

Dreaming of sunshine wrote: »

Would RR apply in Sim 1? I didn't think so because he wasn't disposing of shares in a family trading company - he wasn't connected to the Sweeney brothers? Said pretty much everything else you said though.

Think RR applies as my taking from the book is once he held 25% of the shares its considered a family company pg 114 of elective book..not 100% on this!!

PhilipLuke · 05-09-2014 11:21am

TooLate wrote: »

Think RR applies as my taking from the book is once he held 25% of the shares its considered a family company pg 114 of elective book..not 100% on this!!

I didn't think he could as it wasnt a family trading company but I definitely came across something like that in my studies where they did avail of RR

PhilipLuke · 05-09-2014 11:23am

Very hard to prepare for these exams, I wish the institute had provided far more sample questions to practice it's the only way to study

aca2801 · 05-09-2014 11:42am

TooLate wrote: »

Think RR applies as my taking from the book is once he held 25% of the shares its considered a family company pg 114 of elective book..not 100% on this!!

Same as, I thought one his own 25% shares in his own name, he able to claim it. Ah well. Too little too late to be worrying about it, well done to everyone & hope it works out in Nov

autumnbelle · 05-09-2014 11:50am

Was there something with the grandchild giving them the gift for education in cap 2 or 1? And can they be taxed if your giving cash? Some of my answers were so short

FAE Tax Elective 2014

Comments